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What is an unsecured loan?
An unsecured loan – also known as a personal loan - is where you borrow money without having to provide security against it such as your home or car. Unsecured loans are suitable when you want to borrow a smaller amount of money.With an unsecured loan, interest rates tend to be a bit higher than if you borrowed the money as a secured loan. This is because, with a secured loan, the lender has less of a risk of getting the money back should you default on payments.
What is an unsecured lender?
An unsecured lender is a company that provides a loan without asking for some form of security (such as your home or car). Unsecured loans can be quicker to arrange but will cost more in interest than a secured loan.This is because the unsecured lender is taking a greater risk as should you default on loan repayments, the lender cannot seize your assets in order to get repayment.
What is an arrangement fee?
An arrangement fee is something that is charged by a lender or broker when you take out borrowing such as a loan or mortgage. It is to cover their costs in arranging the lending. Some lenders will offer this free of charge in order to attract new customers.
What is Experian?
Experian is one of the major UK credit reference agencies.Lenders will use a credit reference agency to check the suitability of an applicant based on their financial history. This is known as a credit report.As a consumer, you can request a copy of your credit file from Experian to check that all the data on it is correct and that your details have not been used fraudulently.
What is a bad debt?
A bad debt is borrowing where the money has not been paid back subject to the terms and conditions of the lending agreement. A debt tends to become ‘bad’ where it is unlikely that the creditor will be able to recover the money.Having a bad debt on your credit file will make it harder for you to borrow money in future.